10 Reasons You're Overpaying for Auto Insurance

Here is why your coverage is more expensive than it should be — and what you can do about it.
Updated March 13, 2023
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If you drive a car, auto insurance is a fact of life. But not everyone pays the same rates.

Paying too much for car insurance is one of the reasons so many people struggle to move beyond living paycheck to paycheck

Following are some reasons you might pay too much for car insurance — and a few suggestions about how to lower those costs.

You don't shop around and compare quotes

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It's easy to stick with your auto insurer year after year. Life is busy, and shopping around for coverage might feel like just another item on your to-do list.

But you might overpay for auto insurance if you don't shop around and compare quotes from time to time. Even if you save just $10 every month, you will keep an extra $120 in your pocket over a year.

We’re guessing you could do more exciting things with that money than spend it on insurance.

You have a history of driving tickets

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Although getting one speeding ticket might not impact your auto insurance premium, getting two or more over the course of a few years might well force your rates higher.

So, if you've had multiple driving violations over the past few years, you're probably overpaying for insurance. 

As time passes and the violations fade into history, your auto insurance costs should improve — as long as you don’t continue your bad driving behaviors.

You have a low credit score

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Auto insurance providers use their own individual calculations to determine premiums for customers. In many cases, your credit score will have a bearing on the price you pay for coverage.

This isn’t always true. In fact, a handful of states prevent insurers from using credit scores to set rates. But for millions of drivers, a low credit score might mean they are paying more for insurance than they would if their score was higher.

You are an older driver — or a much younger one

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Your age can impact the rate you pay for car insurance. One of the factors that car insurance companies use when setting rates is the likelihood that a driver will trigger a claim. Age can be one of these factors.

Very young drivers and very old drivers are both likely to pay higher premium costs. That might not necessarily seem fair, but it's reality.

You live in an area with higher rates

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The state, city, and even street you live on can impact your car insurance rates.

Perhaps you live in an area that has a higher claims history due to a lot of traffic, or because theft and vandalism are common in your neighborhood. This is a tough factor to change, short of moving to another area.

You haven’t been driving for very long

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Generally, the more experience you have as a driver, the lower your auto insurance rate. The reasoning behind this calculation makes sense: An experienced driver is considered less likely to get into an accident.

This is one of the reasons it can be so expensive to add teenage children to your insurance. Rates go down as drivers get more experience before climbing again very late in life.

You don't have a continuous history of being insured

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From time to time, it’s possible you won’t really need car insurance. Maybe you move to a large city with excellent public transportation or start working from home and decide to try life without a car for a while.

If you drop your car insurance altogether, you also will disrupt your history of being continuously insured. 

If you later decide to go back to driving and need car insurance, you likely will pay a higher rate because you went a period without insurance.

You have a low deductible

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Your car insurance deductible is how much you pay out of pocket when you file an insurance claim. You must pay the deductible before car insurance coverage kicks in and starts reimbursing your costs.

Deductibles are often in the $250 to $1,000 range. As the driver, you typically choose the amount you would like. As a general rule, the lower your deductible, the higher your premium costs will be, which can lead to paying more for car insurance than is necessary.

You own a specific type of vehicle

Dasha Petrenko/Adobe young woman driving a sports car

The type of car you own impacts your insurance premium. Car insurance providers consider many things about your car when setting rates, including the:

  • Age of the car
  • Engine size of the car
  • Rate of theft for your car model
  • Type of safety features the car has

One thing to consider before shopping for your next car is to narrow your list down to a few options. Then, check with your insurance company to get a feel for how much each model will cost to insure.

You haven't asked about discounts

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Almost all car insurance companies offer various types of discounts. For example, you might get a price break for being a good student, for remaining accident-free, or for driving relatively few miles annually.

Some car insurance companies also offer discounts if you bundle your insurance policies — such as homeowners insurance and car insurance — with them.

Ask your insurer for a list of all potential discounts and see if you qualify for any of them.

Bottom line

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For most people, car insurance is a necessary monthly expense. In the long run, it provides peace of mind, protecting your finances in the event of an accident.

You always want to get the best deal on car insurance that you can. If you're overpaying for car insurance, look over some of the possible reasons on this list and consider making changes that might help you save.

  • You could save up to $500 with some companies
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